HomeMy WebLinkAboutMinutes_Pension Public Safety_05/04/2009TEQUESTA PUBLIC SAFETY OFFICERS PENSION
TRUST FUND
QUARTERLY BOARD OF TRUSTEES MEETING
MINUTES
May 4, 2009
I. Call To Order And Roll Call
The Tequesta Public Safety Officers Pension Trust Fund Board of Trustees held
a regular quarterly meeting at the Tequesta Village Hall, 345 Tequesta Drive,
Tequesta, Florida, on Monday, May 4, 2009. The meeting was called to order at
10:40 a.m.. A roll call was taken by Betty Laur, Recording Secretary. Board
Members in attendance at the meeting were: Chair Ed Sabin, Secretary David
Cooper, Board Member Ken Nielson, Board Member Ray Giblin, and Board
Member Robert Young. Also in attendance were Attorney Bonni Jensen,
Pension Coordinator Lori McWilliams, Senior Accountant Monica Rahim, Dan
Johnson representing Bogdahn Consulting LLC, and Steve Palmquist
representing Gabriel, Roeder, Smith and Company, and Betty Laur, Recording
Secretary..
II. APPROVAL OF AGENDA
MOTION:
Board Member Nielson made a motion approve the agenda as amended to
move the Inves~ent Manager's report ahead of the Monitor's report, if the
Investment Manager arrived. Motion was seconded by Secretary Cooper,
and unanimously carried.
III. APPROVAL OF MINUTES
1. Tequesta Public Safety Officers' Pension Trust Fund Board of
Trustees Emergency Meeting Minutes -January 28, 2009
2. Tequesta Public Safety Officers' Pension Trust Fund Board of
Trustees Quarterly Meeting Minutes -February 2, 2009
3. Tequesta Public Safety Officers' Pension Trust Fund Board of
Trustees and General Employees' Pension Trust Fund Board
of Trustees Joint Meeting Minutes -February 24, 2009
MOTION:
Board Member Giblin moved approval of the minutes of the January 28,
2009 emergency meeting, the February 2, 2009 quarterly meeting, and the
February 24, 2009 joint meeting, with the following amendments:
Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 2
At the request of Chair Sabin, the description of the smoothing example on
the last page was changed to read:
Mr. Palmquist explained this plan did not use smoothing, so costs
would be spread over the future working life; therefore if there were an
$800,000 loss; approximately $80,000 per year would need to be
replaced by the Village. If smoothing were used, 1/5 of the $800,000, or
$160,000 would be recognized in each of the subsequent 5 year periods,
so the V<llage contribution would go up $16,000 this year, $32,000 next
year, etc., until it capped out at $80,000 and would stay at that level until
the full $800,000 was paid.
Two changes were requested to the minutes of the January 28, 2009
emergency meeting by Board Member Nielson. Under item 2, the word
"documentation" was changed to "determination", and on page 2 at the
beginning of the final paragraph the word "Chair" was changed to Board
Member".
Secretary Cooper seconded ~e motion, which carried by unanimous 5-0
vote.
lV. PRESENTATIONS
4. Presentation By Monitor
Dan Johnson, Bogdahn Consulting, LLC, reported he would be the new contact
person, since Dave West had a continuing conflict with the meeting time. Joe
Bogdahn reported the Rockwood representative had indicated since they had
attended the last three meetings they would not attend this meeting. Recording
Secretary Laur clarified that they attended the joint meeting in February, but not
the regular quarterly meeting, and did not make a presentation. Mr. Johnson
indicated he would contact them to attend the next meeting.
Mr. Johnson reviewed their quarterly report, which showed positive performance
beginning the second week in March, with. clear leadership emerging, hopefully
indica#ing a turn around in the economy. Although it had been a bad quarter,
this fund had performed well compared to their peers. Conservative weighting
had been used by the investment manager, which had driven performance.
Chair Sabin asked for clarification from Rockwood at the next meeting on their
long-term bond strategy. Mr. Johnson felt confident that over time the bonds had
performed well, when one did not consider the last nine months. Mr. Johnson
indicated that although this quarter had showed negative 3-1/2%, the fund was
well positioned and doing better than their peers.
Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 ~
Board Member Nielson commented this was one of the best ever report from
Bogdahn. Joe Bogdahn responded Mr. Johnson had spent a lot of time doing
research for this report, and their firm now had a dedicated research team of five
working on additional improvements to the report.
MOTION:
Board Member Nielson moved approval of the report from Bogdahn
Consulting, LLC. Secretary Cooper seconded the motion, which carried by
unanimous 5-0 vote.
5. Presentation by Investment Manager
The Investment Manager was not present at the meeting.
6. Presentation by Steve Palmquist to review Gabriel, Roeder, Smith
and Company's Actuarial Study
AND
9. Re-Address mortality rate tables (from 05/05/08 meeting)
MOTION:
Board Member Giblin moved to include agenda item 9, Re~Address
Mortality Rate Tables, which had been continued from the May 2008
meeting, in the presentation by Mr. Palmquist. Secretary Cooper seconded
the motion, which carried by unanimous 5-0 vow.
Steve Palmquist, Gabriel, Roeder, Smith and Company, distributed a handout
and advised the Board had asked him to look into the amount of money that had
been going into the fund. Referring to the handout, which contained a 10-year
history of the amount paid into the plan by police, firefighters, the Village, and the
State (the baseline amount the Village could take credit for against this
contribution). Discussion ensued regarding contributions, Attomey Jensen
clarified the plans had split December 11, 2003, and Mr. Palmquist verified he
had always figured each plan separately even before the split. Attorney Jensen
reported that state revenues, which came from insurance premiums, were
predicted to be down this year because people had dropped their car insurance
and there were many foreclosures, with property values down. Mr. Palmquist
discussed contributions as a percent of payroll which had been around 10% of
payroll for the past few years; other plans had been between 15%-20% of
payroll. Mr. Palmquist estimated that the Florida Retirement System contribution
rate for public safety would be around 25%-26% of payroll beginning July, 2010.
The primary reason Tequesta's rate was lower was mainly because it was a
young plan.
Mr. Palmquist reviewed different scenarios of what would happen to the City's
cost if return on market value was minus 15% in 2009 and 8% in each of the
Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 4
following five years: cost of the plan would go up 5-3/4% of payroll in the next
year and stay there for a number of years. If asset smoothing were used it would
go up only 1.1 % of payroll each year until it got up to 5-3/4% of payroll, then stay
at that level. The next scenario considered minus 20% in 2009, zero in 2010, and
positive 8% thereafter, which would mean the cost of the plan would go up 6-
1/2% of payroll the first year, and over 8% percent of payroll over time. Two
more scenarios were presented-all four scenarios were under the aggregate
funding method without smoothing, the method the plan currently followed.
Mr. Palmquist explained the differences between aggregate funding method and
entry age normal method funding. Since this plan was small and the aggregate
funding method was more conservative, he did not recommend changing, even
though most other plans in the state used the entry age normal method.
Mr. Palmquist reviewed examples of how the smoothing method would work.
Actual investment return was compared to what it would have been if 8% had
been earned; that amount would be spread over five years. One-fifth of the
difference would be taken the first year, adding another one-frfth each year over
each of five years.
Mr. Palmquist explained that although the last evaluation was done 10/1/07, they
updated their database for this report so #hat the data was as of 10/1108.
Without making any changes, the rate for the Village would go up to 15.3%
because of losses on investments and salary increases larger than the 6%
assumption. Those losses caused a 50% increase in percent of payroll and
more than a 50% increase in dollars. The Village would be contributing
approximately $150,000 more per year. If smoothing had been used, that 15.3%
would be around 11.6% of payroll.
If the mortality rates were changed from those currently in use to the RP 2000
mortality table, that would make the City's cost go up 2.3% of payroll, to 17.72%.
The new table would not be a static table that would have to be re-visited; the
new tables contained allowance for continued future improvements and mortality
rates. Use of the new table was not widely used, but its use was growing.
Discussion ensued. Mr. Palmquist noted this new table would have to be
adopted sooner or later, and recommended the new table which was tied to
length of service-8% for new hires, and gradually decreasing to 6% for people
with 10 or more years of service. Chair Sabin suggested getting feedback from
Police and Fire representatives and HR as to whether the historical trend was
expected to continue over the next few years, since the assumption was being
based on historical actions. Mr. Palmquist explained they used a larger
population than just the Village because there weren't enough people to come up
with statistically significan# figures, and the recommended table was one they
had come up with for several of their police and fire funds. Chair .Sabin
commented that even though this was drawn on a larger population, the question
Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 5
remained whether the historical actual activity was still representative of what
was expected going forward fora 5-10 year period. Mr. Palmquist acknowledged
it would be good to hear from the Village's people to see what they thought.
Mr. Palmquist referred to the actuarial valuation for 2007, commenting actual
increases over an extended period were shown-an average of 10% for Fire and
9.8% for Police were the actual over a 15-year period. Chair Sabin noted this
would indicate the assumptions were fairly conservative across the larger group.
Secretary Cooper commented his only concern was with what was going on
around the country with departments freezing pay raises, freezing benefits, and
layoffs. Mr. Palmquist commented in the actuar#al valuations they had done
through 9/30/08, they had seen a little bit of mitigation in pay increases, but not a
lot, and he expected to see more in 2009. Discussion ensued regarding 3-year
union contracts, the actuarial assumption currently at 6%, and step plans.
Finance Director Forsythe commented each union had 5% increases.
Consensus was the increment above 6% was not needed. Human Resources
Director Merlene Reid joined the meeting at this point and explained there was
5% for police and 5.2% for fire just for this year but negotiations would begin
again soon. Consensus of the Board was they were comfortable with 6%.
In reviewing further information, Mr. Palmquist noted the difference in going to
7% versus 7-1/2% rate of return on investments was 4.4% of payroll. Mr.
.lohnson expressed his opinion that 8% was a viable long-term rate of return, and
advised the General Employees Pension Board had changed their rate from 8%
to 7-1/2%. Discussion ensued. Board Member Nielson asked if the retirement
age could be changed, to which Mr. Palmquist responded that would mean the
funds would lose their State monies. No one indicated they would like to change
the assumption rate, and Mr. Palmquist explained the best time to change it
would be when things were going well and costs were going down.
Mr. Palmquist commented all the decisions under discussion were Board
decisions, not Village decisions. Board Member Nielson responded he thought it
would be prudent to seriously consider changing the mortality rate to the new
table; Board Member Giblin and Secretary Cooper expressed agreement. Chair
Sabin expressed his opinion that all of the changes under discussion did not
have to be made today, but could be made when timing was right, balancing all
the elements of alignment of the plan with others in the State with the least
amount of impact, changing the method of funding, or make assumption changes
that would fiscally impact long-term growth of the plan, as suggested by Board
Member Young.
During the ensuing discussion, Mr. Palmquist advised that without doing anything
at all the ~Ilage's cost would be 15.3% and encouraged Finance Director
Forsythe to build that into the Village's budget. Smoothing was discussed
further.
Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 6
MOTION:
Board Member Nielson moved to change to the new RP 2000 mortality
tables, shift to 5 year smoothing for determining the amount of
contribution by the Village, and change from aggregate method to entry
age normal funding method. Board Member Young seconded the moron,
which carried by unanimous 5-0 vote.
Mr. Palmquist advised this would begin with the actuarial valuation of 10/1/09,
effective for October 1, 2010 and October 1, 2011. Pension Coordinator
McWilliams asked if investment returns and salary assumptions should be put on
a calendar to be brought up at a later date. Consensus of the Board was not to
calendar these items since they would be included in the actuarial evaluation in
two years and could be discussed then, unless the Board felt they should be
brought up before that time.
V. UNFINISHED BUSINESS
7. Consideration of future budgeting for 2-year renewals for
Travelers Fiduciary Liability Policy
Lori McWilliams, Pension Coordinator, explained this item was being brought
before the Board for future premium payments, since the insurance company
wanted to bill for two years at a time. There was no difference in the policy
amount; this was simply so that this item could be budgeted for two years in the
future. Attorney Jensen advised no motion was necessary; it would be budgeted
for two years in the future.
8. Total Cash Remuneration Determination -tabled from 02/24/09
Joint Meeting
Lori McWilliams, Pension Coordinator, advised that Board Member Nielson had
requested this matter be brought back in February, then it was tabled to this
meeting. She explained the problem was an unintentional clerical error in the
minutes; Attorney Jensen had read into the record the list of pensionable items
suggested by the Board, based on HR's and Finance's suggestions, but when
translating that into the minutes the career service benef~s had been omitted.
Since it was not on the table in the minutes, this had caused issues with the
Finance Department, and they could not consider it a pensionable item. At the
special meeting on February 24, Pension Coordina#or McWilliams had asked the
Board to amend the minutes; however, there had been discussion and Board
Member Nielson had requested she find out what other municipalities considered
pensionable items, The career service benefits item had been approved by the
Board and was in the recording of the meeting. Attorney Jensen explained there
Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 7
had been two different charts, and the wrong one had been placed in the
minutes. It was explained that the career service benefits item was a longevity
pay plan based on years of service. Board Member Nielson commented his
concern was who had the authority to determine which items were pensionable--
this Board, or Village Council, who was responsible for appropriating monies to
cover these financial items. Attorney Jensen clarified it was this Board's
authority to interpret the definition of total cash remuneration, and in order to do
that, the Board went back to the municipality and the coAective bargaining
agreements and looked at what was included in the definition of pensionable
salary. The municipality gave the Board a lis# of items that were included as
pensionable, which the Board adopted as their definition of pensionable items.
Board Member Nielson asked what the authorizing document was, to which
Attorney Jensen responded she did not know where Human Resources obtained
the information to make the chart, but she guessed it was the collective
bargaining agreement; however this information might precede the collective
bargaining relationship. Board Member Nielson wanted it on the record he had
asked where the authority came from.
MOTION:
Secretary Cooper made a motion to add career service pay to the
pensionable items lis# to correct the minutes of the August 4, 2008 meeting.
Board Member Giblin seconded the motion, which carried by unanimous 5-
0vote.
VI. STANDING REPORTS (INFORMATION ITEMS)
10. New applicants for participation in Pension Plan
Police Officer - Ariel I. Ramirez, Jr. Date of Hire 12/22/08
11. Change of Beneficiary
None
12. Request for withdrawal of contributions (employees
terminating employment with Village of Tequesta) -Ratification
of withdrawals made since ~e last meeting on 2 signature
basis:
None
13. Terminated Employees who have not taken their contributions
Officer Charles Malley -Resigned 8/25/08 -Vested
Public Safety OfFcers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 8
14. Revenue and Expenditure Report
There were no questions or comments on information items 10-14.
VII. PAYMENTS TO BE RATIFIED (PAYMENTS MADE SINCE LAST
MEETING)
15. Hanson, Perry & Jensen, P.A.
Services through 1115109 $3,401.97
Business Services Connection, Inc.
Preparation of 1/28/09 emergency meeting minutes 50.97
Business Services Connection, Inc.
Preparation of 2/2/09 joint meeting minutes 101.94
Business Services Connection, Inc.
Preparation of 2/2/09 quarterly meeting minutes 135.92
Business Services Connection, Inc.
Office Work for weeks ended 2/6/09 through
04/10/09 1,284.70
IRS
Additional Fee for IRS Determine#ion Letter 500.00
Lori McWilliams -Trustee School Expenses
Split with General Employees Pension 158.78
MOTION:
Board Member Nielson moved approval of the items presented for
ratification under agenda item 15. Secretary Cooper secohded the motion,
which carried by unanimous 5-0 vote.
VIII. PAYMENTS TO BE REVIEWED AND APPROVED
16. Perry & Jensen, LLC.
Services through 04/15/09 889.52
Bogdahn Consulting, LLC
Fee for Quarter ending 3/31/09 2,000.00
Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 ~
Rockwood Capital Advisors, LLC
Fee for Quarter ending 3/31/09 5,051.83
Gabriel Roeder Smith 8ti Company 2,344.00
Services through 2/28/09
Business Services Connection, Inc.
Minutes of Joint Meeting with General
Employees' Pension Board held 2124109
(112 charged to each pension board) 59.46
Chair Sabin questioned the amount of the Bogdahn invoice, which had not been
updated to the new contract amount. Mr. Johnson advised there would probably
be corrected invoices in the future. It was verified the Board had received an
invoice in the amount of $2,000 for the quarter.
MOTION:
Secretary Cooper moved approval of the items presented for payment.
Board Member Young seconded the motion, which carried by unanimous 5-
0vote.
tX. BUDGET REPORT
17. Quarterly Budget Report Expenditures
Senior Accountant Monica Rahim advised there had been unexpected legal
expenses, there were five more months to cover and asked if the Board would
like to amend the budget. Chair Sabin commented that actuarial services might
also increase. Attorney Jensen commented if $2,200 were added into the legal
expense budget it would be back on track. Consensus of the Board was to
leave the budget as it was since it was for estimating and planning.
X. NEW BUSINESS
18. *Discussion and consideration of procedure on how to handle
items that might have a time deadline when there is the
possibility of not being able to get a quorum
Lori McWilliams, Pension Coordinator explained this was almost an issue with
the IRS determination letter when having to turn it around in a 24-hour period,
and she had been very lucky to get three Board members for a quorum when it
looked like she was not going to be able to do so. She asked if the Board
wanted to give someone else authority to do something if this situation arose
again. Attorney Jensen advised that under the law, the Board had to meet in
public to make that decision-she could have gone ahead and billed it and the
Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 10
Board could have then decided whether or not to pay it. Attorney Jensen
clarified that a quorum could not be obtained via telephone. Discussion ensued.
Consensus was this would be discussed on a one-on-one basis for future similar
situations.
19. Worker, Retiree, and Employer Recovery Act of 2008 (H.R,
7327)
Attorney Bonni Jensen reviewed important items in this Act affecting government
pension plans. Previously, pension plans could not pay any more than a market
rate of interest; under this Act pension plans could pay interest at rates set by
federal, state, or local law even if it exceeded market rates. This was important
for Df20P programs that paid interest now the interest rate could be whatever
the Board set. The $3,000 exclusion for payment of Public Safety Officers'
health insurance premium had been clarified that it also applied to aself-funded
health insurance program. Some relief had been granted for the required
minimum distribution used in DROP programs. As of December 31, 2009 non
spouse beneficiaries would be allowed to roll over pension plan distributions into
IRA accounts. There had also been changes in the private sector.
20. Consideration of approval for David Cooper to attend 30~'
Annual Police Officers' and Firefighters' Pension Trustees'
School May 19-20, 2009
Pension Coordinator McWilliams confirmed with Board Member Cooper he still
planned to attend the 1=PPTA school in October. Senior Accountant Rahim
would add the school expenses to the budget.
MOTION:
Board Member Young moved approval for David Cooper to attend 30th
Annual Police Officers' and Firefighters' Pension Trustees' School May 19-
20, 2009. Board Member Giblin seconded the motion, which carried by
unanimous 5-0 vote.
21. Attorney's Agreement due to Firm Name Change
Attomey Jensen advised her partner had retired and the firm's Warne had been
changed to the Law Offices of Perry & Jensen, and she had prepared a contract
reflecting the name change.
MOTION:
Secretary Cooper moved approval of the contract reflecting the firm name
change from Hansen, Perry ~ Jensen, P.A. to The Law Offices of Perry tl<
Jensen, LLC. Board Member Young seconded the motion, which carried
by unanimous 5-0 vote.
Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes
May 4, 2009 11
XI. ANY OTHER MATTERS
Pension Coordinator McWilliams announced each member had been provided
with information regarding the FPPTA conference to be held in Boca Raton in
June.
Also, each member had been provided with a manual, to which contracts would
be added, and this would be provided to future new members. Ms. McWilliams
requested if anyone wanted something else added to the manual, to let her
know.
Pension Coordinator McWilliams commented the time allotted for meetings no
longer seemed sufficient, so this would be brought up at a future meeting; Chair
Sabin noted it seemed like three hours was needed.
Attorney Jensen advised the Board would be receiving a discussion of sweeping
changes to 175 and 185 increasing the ability to invest in foreign investments,
which had recently passed, and would now need the Governor's signature.
XII. COMMUNICATIONS FROM CITIZENS
XIII. ADJOURNMENT
Upon motion by Board Member Glblin, seconded by Board Member Young, and
unanimously carried, the meeting was adjourned at 1:20 p.m.
Respectfully submitted,
Betty Laur
Recording Secretary